British Pound Price Outlook: GBP/USD Pullback Consolidates Ahead of NFP
Key Talking Points:
- GBP/USD drops towards 1.41 as the US Dollar breaks a two-week range
- Today’s NFP figures are likely to be the focus for GBP/USD traders
The ADP figures released yesterday were enough to snap the US Dollar out of a tight two-week range, leaving USD crosses struggling to keep bullish momentum. There are grounds to believe that today’s NFP data will provide further gains for the Dollar as expectations of a strong reading build. That said, the ADP figures have not been an accurate indicator of NFP data in the past, looking to last month as an example, so we may see USD retreating if today’s figures disappoint.
GBP/USD is slowly backing away from the 1.42 level after keeping to a tight range in the last two weeks, unable to get a strong push above 1.4218. The stochastic indicator was peaking at overbought conditions prior to yesterdays’ pullback, but it is now nearing the oversold level, which may attract new buyers as the pair approaches the 1.41 level.
For immediate support, I would focus on the 1.4075 area after which there is a clear path down to 1.40. This psychological round level is likely to attract traders on each side of the coin, so if we see a pullback to this level we may see sideways consolidation before any other move is achieved.
GBP/USD Daily chart
--- Written by Daniela Sabin Hathorn, Market Analyst
Follow Daniela on Twitter @HathornSabin
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.